Why TravelCenters of America Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of TravelCenters of America (NYSE: TA) were getting stranded today, falling as much as 13% after posting quarterly earnings.

So what: The highway rest-stop operator beat EPS estimates slightly with a $0.41 loss on expectations of -$0.43, but revenues were down 1.9% to $1.96 billion, well below the analyst consensus of $2.11 billion. Despite the drop in sales, management noted an improvement in fuel gross margin, nonfuel revenues, nonfuel gross margin, and EBITDAR (The R is for rent). However, gallons of fuel sold declined by 3.3%. CEO Thomas O'Brien noted that the company overcame severe weather challenges and that the calendar had one less day due to Leap Day.

Now what: The winter months are historically slow for TravelCenters, and the company deserves credit for improving earnings on declining revenue, but macroeconomics seem to be against rest-stop fuel vendors, as more efficient will mean fewer stops to fill up or lower fuel sales and less of a need for companies like TravelCenters. Shares are cheap, but this could be a value trap.

Get more on TravelCenters of America. Add the company to your Watchlist here.

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